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April 8th, 2005

"Enron tentatively agrees to settle ERISA claims"

Enron Corp. has tentatively agreed to settle ERISA lawsuits over employee pension fund claims. Enron is the energy trader whose 2001 collapse resulted in corporate governance and accounting changes.

Under the proposed agreement, Enron would allow a $356.2 million claim to be made against it in U.S. bankruptcy court to resolve employee lawsuits over pension fund stock losses. The tentative pension fund settlement would resolve a U.S. Department of Labor suit over the losses as well, but U.S. District Judge Melinda Harmon and a bankruptcy judge in New York must approve the accord.

The proposed settlement would return only a fraction of the losses Enron workers lost in their retirement accounts. If a settlement with a dozen ex-Enron board members over their liability for the pension fund losses is approved, Enron workers may be able to add $86.5 million to their recovery. The settlement was preliminarily approved last month.

Should Enron’s proposed settlement of its pension fund liability be finalized, it would still allow workers to continue pressing claims against ex-Enron Chairman Kenneth Lay and former Chief Executive Jeffrey Skilling. Lay, Skilling and a former Enron vice president who oversaw the company’s accounting operations, Richard Causey, face a criminal fraud trial in January 2006. All three are accused of helping to fabricate Enron’s earnings and hide debt before the company sought Chapter 11 protection.

Enron sought bankruptcy protection in December 2001 after disclosing executives hid billions of dollars in company debt in off-book partnerships.